The 2026 Autumn Budget
Another Budget, another prime minister, and another chancellor alongside. When Burnham came to power just over 100 days ago, his message was a bold one. He described the need for a new social contract, declaring the ‘end to 40 years of neoliberalism’, with increased control of public utilities and devolving more power to regional authorities.
Ambitious words perhaps, yet aside from a few notable announcements such as moving the state pension triple lock to a double lock (albeit only from 2030) and plans for a national care service, his first 100 days have been characterised by a raft of smaller measures. These have largely been focused on helping high street businesses, pubs and entertainment venues as well as easing cost of living pressures and rules to end ‘rip off’ business practices.
Healy’s first Budget followed this pattern, with relatively little focus on longer term measures. The chancellor’s key phrase was ‘breathing space’, which meant helping with current cost-of-living pressures and some sectors in the economy that are most under strain.
There was also a reaffirming of Labour’s commitment to the fiscal rules set out initially in Rachel Reeves’ first Budget. The prize for this was a relatively flat bond market reaction. At a time when borrowing costs are becoming a real concern, this will be a welcome relief for the chancellor.
It is likely that there will be more of an indication of the longer-term priorities and more radical measures this government may be planning to take on the release of the Prime Minister’s 10-Year Plan.
What does the Budget mean for savers and investors?
Changes to ISAs
Although this Budget was by no means radical, there was some relatively good news for savers and investors. In particular, the cancellation of the proposed reduction of the cash ISA allowance from £20,000 to £12,000 for under-65s from April 2027. Although not confirmed as definite by the government, it is expected that consequently, the anti-circumvention rules, including the 22% tax on cash interest, will no longer go ahead.
These changes are welcome. Maintaining the relative simplicity, flexibility and the tax-free nature of the ISA regime will ensure the best outcomes for those informed enough to understand the benefits and trade-offs of both saving and investing.
Alongside retracting the cash ISA allowance cut, the chancellor announced that a consultation will begin on a new ‘starter ISA’ which will be designed for first time investors. Although no more details have currently been announced, this seems unlikely to benefit existing investors, although some advantage may be gained by their children and grandchildren who are yet to invest. We will be following the consultation process with interest.
Another positive development in ISA news was that there will no longer be an effective penalty for those who use their Lifetime ISA (LISA) to buy their first property for over the allowed limit of £450,000. Previously, a 25% penalty meant that, after factoring in the government bonus, savers buying a non-qualifying home were effectively charged a 6.25% per cent penalty on their own contributions into the LISA. The government have reduced this penalty to 20%, meaning the government bonus is removed but not the contributor’s own capital.
The LISA is set to be replaced by a more targeted First Time Buyer ISA in April 2029. This will be similar in structure, with an annual contribution limit of £4,000 and a government bonus of 25%. It differs from the LISA due to the bonus only being available for use in the purchase of a first property up to £450,000 rather than also for use in retirement.
For founders and business owners
There was mixed news for founders and business owners. On one hand, the allowance for Business Asset Disposal Relief, which reduces capital gains tax payable on the sale of business assets, has been halved from £1m to £500,000. This means from 2027 business owners may find themselves with a higher tax bill on the sale of business assets. On the other hand, a new Founder’s Relief was announced, this being far more generous at a 10% rate on lifetime gains of up to £10m “for the founders of our most successful firms”. Who exactly would qualify for such a relief is yet to be announced.
Income tax changes
Finally, there was some negative news for savers and landlords. Income tax rates on interest and rental income will rise by another 2% in April 2027. This means that taxpayers earning these kinds of income will face basic, higher and additional rates of 24%, 44% and 49% respectively.
Dividend taxes will remain unchanged. As of April 2026, these are 10.75% for basic rate taxpayers and 35.75% and 39.35% for higher and additional rate taxpayers respectively.
The above changes underline the importance of utilising tax free and tax-advantaged options for saving and investing as well as utilising yearly allowances where appropriate.
Rumours not realised
There was more, mostly good, news in what wasn’t announced. As usual, much pre-budget speculation proved to be incorrect. The Chancellor did not touch pension tax free cash, reduce tax relief on pension contributions, or increase capital gains tax rates. Rumours that stamp duty may be reduced or removed were also proved misguided.
As always, a pragmatic approach should be taken to Budget rumours. It is one thing to realise taxable gains a little earlier than planned to get them in before Budget changes, it is quite another rush to take all pension tax-free cash off the back of rumours, which many have recently done to their financial detriment. Having a financial adviser to rely on through financial speculation and hearsay can help to calm the nerves and ensure the best decision from available information can be taken.
Wider measures
Despite the lack of headline-grabbing policies, there were some notable measures which gave an indication of the direction of the Burnham government’s priorities when it came to the wider economy.
Extra funding was announced for the Social and Affordable Housing programme, first time buyers and the National Wealth Fund, with £5bn of investment and lending made available for ‘defence dual-use technology and sovereign capability’. Ending rough sleeping also remained a priority, with £420mn extra funding to this effect.
Small businesses got some additional support, with a focus on the high-street. The business rate relief threshold will increase from £12,000 to £18,000, with rates frozen for some retail, hospitality, and leisure businesses for 2 years. Vape shops and gambling premises will pick up some of the bill for these changes.
There were also measures to promote enterprise with a focus on incubating and retaining talent and innovation; Support with living costs for young founders was announced alongside the aforementioned founder’s relief. The Enterprise Management Incentives framework, consisting of tax advantaged share schemes for employees designed to help firms hire and retain talent, was also expanded.
An extra £500 million was committed to AI safety and security, and a new sovereign AI unit was announced to channel government investment into strategic British AI firms, backed with £140 billion. A new British Data Centre Covenant was launched, setting strict tests for data centres around community investment, local job creation, and water supply protection, in exchange for guaranteed grid connections and permission for on-site generation where needed.
There were considerable steps towards Burnham’s goal of devolution. Direct funding and loans for Mayoral and Non-Mayoral authorities was announced. A pathway was also mapped out towards local authorities retaining 100% of business rates by 2030 as well as a greater portion of income tax receipts and an option to introduce an overnight visitor levy.
Finally, there was assistance with fuel and energy costs. Alongside the previously announced VAT cut on energy, the fuel duty cut was extended to June from January 2027. Standing charges on gas bills will be eliminated, with plans to do the same for electricity. A one-off £100 payment to English households in Council Tax bands A-D to help with energy costs was also announced for January. Funding has been made available to Scottish, Welsh and Northern Irish authorities to do the same.
Risk Warnings
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